Digital Surge Crypto Exchange Manages to Survive FTX Fallout

Digital Surge stands as an Australia-based cryptocurrency exchange. The exchange had managed to survive by the skin of its teeth, after the collapse of the FTX crypto exchange. The problem for Digital Surge was that they held millions in digital assets on the exchange.

Attempting To Recover 22,545 Customer’s Investments

On the 24th of January, 2023, creditors of Digital Surge approved a bail-out plan spanning five years. This plan’s goal is the eventual refunding of 22,545 customers’ crypto assets. These assets were frozen on the platform since the 16th of November, 2022. The goal is to allow the crypto exchange to continue operation despite this crippling setback

As for how this rescue plan saw fruition, it was first presented to the customers in question via an email sent by the exchange’s directors. This email, was sent on the 8th of December, 2022. This happens to be the same day as when the exchange had fell into administration.

Borrowing Money To Make Money

A document called “Deed of Company Arrangement” goes into detail about the entire event. In the document, it’s shown that Digital Surge will be granted 1.25 million AUD, around 880,000 USD, through a loan. This loan will be provided by Digico, an associated business, and will allow Digital Surge to continue its operations, albeit heavily in debt.

KordaMentha, the administrator of Digital Surge, gave a statement about the matter at large. The administrators explained that the quarterly profits of the exchange would be used to pay the creditors back.

A report sent out by KordaMentha on the 24th of January gave details on how the customers are set to be paid. The report explained that both fiat and crypto would be sued to repay the customers, and the composition is based on the claims the customer made and the assets within the said claim. Furthermore, KordaMentha stated that there is an expectation that customers will be contacted in the future as the administration process continues.

FTX Bankruptcy Caused Massive Financial Damage

Delta Surge has been in operation since 2017. However, it suffered greatly at the hands of the FTX exchange’s collapse back in November of last year. The exchange was forced to freeze all deposits and withdrawals a few days after the FTX exchange filed for bankruptcy, with FTX Australia going into administration.

KordaMentha stated that while Digital Surge assured the public that it had “limited exposure” to FTX, the Digital Surge definition of limited turned out to be around $23.4 million in total. As such, it’s no real surprise the exchange almost buckled in the FTX collapse.

An array of crypto firms have collapsed thanks to the FTX bankruptcy. Among the more prominent names are Genesis and Blockfi, who were both forced to file for bankruptcy protection after FTX’s collapse. Surge Delta stands as one of the few firms that managed to scrape together a feasible strategy to continue survival.

Time will tell how successful this venture will be, but any movement toward the eventual repayment of innocent customers is an excellent move to make. The FTX collapse crippled the crypto space for some time, and the eventual recovery from it is a long and arduous process.